Wellington Drive gets $40m boost

Ross Green says an extra $40 million will speed the growth in earnings. Picture / Paul Estcourt

Electronic motor designer Wellington Drive Technologies hopes to accelerate growth after getting a $40 million cash injection from a US investor.

The Auckland-based company exports most of its motors for use in products such as refrigerators and washing machines. Final assembly is carried out in Asia and sales managed from Singapore.

The company made the investment announcement as it released its annual result yesterday.

Its net loss for the year to June 30 was $4.5 million, down from $4.9 million last year, and revenue more than tripled to $7.1 million.

Managing director Ross Green said the rise in revenue was welcome, but less than hoped for.

"The market we're addressing is really a US$20 billion market and it's no secret that the company's aim is to capture a significant portion of that downstream," Green said.

"If we needed to be profitable we can be profitable quickly but the mission is being profitable with a significant market share."

Green said an agreement for US investment group Source Vortex to acquire a 33.4 per cent cornerstone stake in Wellington Drive for $40 million of new equity would lay the foundations for accelerated growth in sales and earnings.

Source Vortex would subscribe for 100 million shares at 40c a share, if shareholders approve the deal.

Source Vortex director Aubrey Hornsby said the firm liked to invest in sustainable, clean technology and high-value businesses such as Wellington Drive.

"There is at this moment a keen interest by a lot of my peers in the venture capital world in what's called clean technology," Hornsby said. The investment firm had a lot to offer Wellington Drive's US strategy.

"The company is into a sales cycle of many months with some customers that we have good relationships with, so we hope to accelerate that sales cycle," Hornsby said.

Green said strong revenue growth and continued cost reduction this year would improve short- and medium-term earnings.

Prices for copper had more than tripled during the past three years, lifting the price of conventional motors and making electronic motors more attractive.

There was also no sign that intensified international focus on energy costs, which boosted interest in Wellington Drive, would change in the medium term.

Delays in converting sample programmes into production orders had affected the financial result, but those delays appeared to be reducing.

Wellington Drive shares closed up 4c to 50c yesterday.